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House to vote on federal pension changes separate from highway bill

The House will take up a bill this week that increases federal employees' contributions and change the annuity calculation for new employees from the high-three formula to the high-five.

Last month, H.R.3813 was inserted into a massive highway bill, H.R.7, or the American Energy and Infrastructure Jobs Act. The House now is breaking up H.R.7 into three components, one of which is H.R.3813. A House Rules Committee spokesperson said H.R.3813 will be voted on Thursday.

The current language of H.R. 3813 increases federal employees' contributions to their retirements by 1.5 percent, phased in over three years.
For individuals not subject to mandatory retirement who choose to retire on or after Jan. 1, 2013, the FERS minimum supplement is eliminated. Currently, the FERS minimum supplement is paid to those qualifying employees who retire prior to age 62.

The legislation also introduces a new pension formula that applies to employees who have less than five years of creditable service or are hired after Dec. 31, 2012. The new annuity formula would be based on the highest five years of salary instead of the current calculation of the highest three years. Also, the contribution for these new employees is 4 percent.

In an effort to save federal employees from the benefit cuts, Rep. Gerry Connolly (D-Va.) introduced an amendment to H.R. 7 on Wednesday to replace language in the bill that would increase federal employees' contributions to their pension funds. Connolly's amendment would replace it with language addressing oil industry tax credits. However, now with the separation of H.R.7 into different components, federal benefits is still on the table.

Connolly has spoken out against the cuts to retirement benefits.

"Federal employees have already contributed $60 billion in deficit reduction through a two-year pay freeze," he said in a statement. "They've done their part and rightfully would like to know why they are being singled out yet again. Furthermore, there is no nexus between a so-called transportation bill and slashing federal pensions. The transportation bill should be funded by transportation-related user fees, as it always has."

The conferees debating the payroll tax cut extension also are considering increases to federal pension contributions. Their tentative deal would make federal employees pay 1.2 percent more for their pensions as a way to pay for jobless benefits. It's unclear how the potential passage of H.R.3813 would impact the conferees' proposal.

On Wednesday, Patricia Niehaus, the national president of the Federal Managers Association (FMA), sent a letter to House members criticizing both bills for disproportionately targeting federal employees.

"Federal employees are not only being targeted in the name of deficit reduction, but now it seems Congress is willing to use them as a means to pay for any legislation moving through the House," Niehaus wrote. "This sets a dangerous precedent and disproportionately places an inequitable burden on federal employees under the false pretense that their pay and benefits are far greater than their private sector counterparts."

Niehaus specifically objected to language in the bills calling for changes to CSRS and FERS, which would require federal employees to make the 1.5 percent contribution to their retirement plans. She also expressed concern over the provision that eliminated the FERS annuity supplement.

The House broke up H.R. 7 into three parts, one of which is H.R. 3813. House members will begin debating H.R. 3813 today, according to Doug Andres, director of the House Rules Committee. He said that a vote on the bill is expected for Thursday.